TPO upholds refusal to pay complaint against Royal Mail

The Pensions Ombudsman (TPO) has upheld a complaint against the Royal Mail Statutory Pension Scheme (RMSPS) over a refusal to pay complaint.

‘Mr Y’ complained that the scheme had refused to pay a full deferred pension to him upon retirement, stating that the RMSPS management team (RMSPS MT) was only prepared to pay the GMP which he accrued in the scheme from March 1979 to April 1986, as notified by the HMRC National Insurance Contributions Office (NICO) during a GMP reconciliation exercise.

TPO has upheld the complaint, noting the “absence of any justified reason why Mr Y would have lost his entitlement to a deferred pension”.

RMSPS MT has been given 28 days to calculate the revalued deferred pension available to Mr Y at age 65, and have also been ordered to pay Mr Y £500 in recognition of the “significant distress and inconvenience” suffered.

Mr Y was employed by the Royal Mail Group (RMG) between 1979 and 1986, and was convicted twice in court for charges brought against him by RMG.

He contacted the Pension Service Centre (PCS), responsible for administering RMSPS, in April 2017 to enquire about the benefits available to him, but was informed that their was no record of his entitlement.

Whilst undertaking a GMP reconciliation exercise in April 2017 though, PCS found that, according to NICO, Mr Y had been contracted out of the state earnings related pension scheme (SERPS) whilst a member of the RMSPS between 23 March 1979 and 12 April 1986.

PSC stated that this therefore entitled Mr Y to a GMP of £6.29 per week from age 65 only, creating a pension record to reflect this GMP entitlement in May 2017.

Mr Y disagreed with this decision, which resulted in PSC seeking his employment records from RMG to corroborate.

As RMG destroys records of this type after six years though, the onus to produce documentary evidence of RMG employment or RMSPS benefit entitlement was placed on Mr Y himself.

PSC stated that failure to produce such evidence would mean the decision stood, and Mr Y subsequently appealed the decision under the RMSPS two stage internal dispute resolution procedure.

Whilst the complaint was not upheld at either stage, PSC did offer a goodwill compensation payment of £100, which Mr Y declined.

The RMSPS MT argued that the Trust Deed and Rules permitted RMG to reduce Mr Y’s pension in excess of his GMP to recoup any monetary loss suffered as a result of his criminal activities.

The deputy ombudsman, Karen Johnston, clarified though that whilst RMG could have recovered financial losses arising out of Mr Y’s criminal activities through his pension benefits, this would have been undertaken via the Secretary of State, adding that Mr Y should also have received notice if this was the case.

Furthermore, RMSPS MT was not able to obtain evidence to corroborate its stance that RMG had recovered financial loss via his pension benefits.

Johnston emphasised that the decision can be made only on the evidence available, highlighting that NICO’s records indicated Mr Y retained GMP liabilities in the RMSPS which have not been transferred to another pension arrangement.

She added: “PSC have not put forward any evidence which explains why the whole value in excess of GMP would have been reduced to zero yet leaving a liability for the GMP which itself was not recorded.

“In the absence of any justified reason why Mr Y would have lost his entitlement to a deferred pension, this leads me to conclude, on the balance of probabilities, that Mr Y is entitled to a deferred pension and not just the GMP from the RMSPS”.